Whatever you’ve heard about California's situation, it’s worse

Whatever you’ve heard about California's situation, it’s worse

The industry is crippled, it will likely get worse and it may never recover.

by Dennis Halladay, Hoard’s Dairyman Western Editor

Word of mouth in the dairy industry has been spreading the bad news for months about how things are in California. But no matter what you’ve heard, it’s worse.

Yes, there is a financial catastrophe underway. Everyone who milks cows there is losing money. Whatever equity was rebuilt after the 2009 collapse is going up in flames again. The bonfire isn’t as big this time, though, because there isn’t nearly as much to burn.

There’s no central clearing house that keeps track of the number of state dairies that have already filed for bankruptcy or left the business, although accountants, auction yards, industry suppliers and producers do give some clues about the carnage underway. It seems clear that the number is in the dozens; at least several and perhaps many. I expect there are a lot more to come and do not expect California’s dairy industry to ever be the same.

It is clear that there are several notable differences to this crisis versus 2009:

• The state of mind of California dairy producers is very emotional, but it is also vastly more practical than before. The experience of surviving 2009 seems to have given many of them the guts to be objective and see that getting out and having something to walk away with is better than hanging on, hoping and coming out with nothing.

• There also seems to be much less reluctance to file bankruptcy, probably also as a result of how many occurred three years ago. If there was any stigma to doing so then, there is vastly less now.

• The shock and denial that seemed common in 2009 is also gone. In its place is widespread exasperation and emotional fatigue. California dairy producers – those throughout the West, in fact – are tired of struggling and worrying. They are worn out. This isn’t the life or business they have known or that anybody wants to continue.

Will those who survive this time ever have the dedication, enthusiasm and trust for the industry that they did before? That is the most interesting question of all that remains to be answered.